Emerging Europe came through the second virus wave in Q4 in a better state than we had expected, with services sectors holding up and industry booming in Central Europe. But the headwinds have mounted recently. The extension of virus containment measures has weighed on sentiment and indicators of mobility in February have remained depressed. The threat of renewed virus waves is becoming a bigger concern in Central Europe and policymakers look set to keep restrictions in place for longer than we had assumed, or even tighten them further. At the same time, the vaccination rollout is not yet out of first gear, and there is a growing chance that this delays the recovery for longer.
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